My name is Sarath. I have debentures of various companies interest of which are received after deduction of TDS. But when I file ITR I'm finding that these accumulated interests are shown as income from other sources and are again taken into account for taxation. My question is why do we have to pay tax again and is there any means by which we can avoid this double taxation?

Ans: As per income tax provisions, interest income can be offered on accrual basis (i.e. interest earned but receivable at later stage) or cash basis. But once you start offering income under one method, you cannot change.

In your case, Rs 24,624 is interest earned during tenure of 10 years. If you have offered interest income every year (even if not received) for FY 21-22, you have to offer interest earned between April 1, 2021 and maturity date of December 21.

Amount offered in Income Tax Return can differ from amount appearing in AIS, if income is offered correctly as per Income Tax provisions and appropriate reply should be filed in AIS feedback option.

Ans: If Interest Income is already offered to tax on accrual basis, it will not be taxed again on receipt basis. You can provide feedback against AIS accordingly and no need to offer the same income again.

Ans: Yes, this is right from ITR point of view as you are accounting for it on a receipt basis.

Ans: Hello there,

I understand your concern about the double taxation on your Fixed Deposit (FD) interest. Let me clarify this for you.

The Tax Deducted at Source (TDS) is a means of collecting income tax in India and is governed under the Indian Income Tax Act of 1961. When it comes to FDs, banks deduct TDS when your interest income exceeds a certain threshold in a financial year. As of now, this limit is Rs. 40,000 for non-senior citizens and Rs. 50,000 for senior citizens.

Now, coming to your question, the TDS deducted by the bank is not the final tax. It's just a part of the total income tax you're liable to pay for the year. The bank deducts TDS at 10% (if PAN is provided) on the interest earned, but your final tax liability could be at 5%, 20%, or 30% depending on your total income for the year.

So, when you file your Income Tax Return (ITR), you need to add the interest income from the FD to your total income for the year. The tax on this total income is then calculated based on the income tax slabs. If the total tax calculated is more than the TDS already deducted, you'll have to pay the difference. Conversely, if the total tax is less than the TDS, you can claim a refund.

For example, in your case, if your total income including the FD interest falls under the 30% tax bracket, you'll need to pay an additional 20% tax on the FD interest (30% total tax minus 10% TDS already deducted).

I hope this clarifies your doubt. Please consult with a tax advisor or chartered accountant for personalized advice based on your total income and tax slab.

Best regards.

Ans: As matter is pertaining to 17-18, it is advisable to make the tax payment after doing actual calculation of Income as per revised computation of Income.